Unrestricted bank closures: what Getmantsev proposes in the bill regarding the Deposit Guarantee Fund.

The bill titled "On Amendments to Certain Legislative Acts of Ukraine Regarding the Regulation of Certain Issues of the Activity of the Deposit Guarantee Fund for Individuals, the National Bank of Ukraine, and Joint Investment Institutions" (No. 13007), authored by the chairman of the VR committee on financial, tax, and customs policy, Daniil Hetmantsev, infringes upon legislation concerning the protection of depositors' rights and access to public information, reports UNN.

Without Property Rights and the Ability to Appeal in Court

In the explanatory note to the bill, Hetmantsev claims that the document is designed to minimize risks from potential shocks caused by the special conditions of the Ukrainian economy during the martial law period, ensuring the stability and reliability of Ukraine's banking system by improving the regulatory framework for effective responses to cases of bank insolvency, thereby minimizing the risks of potential panic in society.

Moreover, according to him, the bill aims to enhance the protection level for depositors and bank creditors, improve the processes for withdrawing insolvent banks from the market and their liquidation, as well as implement modern international practices aimed at ensuring the stability of Ukraine's financial system.

However, upon closer examination of the document, it becomes clear that the adoption of this bill could, on the contrary, deal a significant blow to the economic stability of the country. Under the guise of the requirements of the International Monetary Fund (IMF), Hetmantsev is attempting to lobby for a significant expansion of the powers of the Deposit Guarantee Fund for Individuals (FGVFL) and to make it fully "manual." His legislative initiative contains provisions that contradict the Constitution of Ukraine, which not only limit the rights of depositors but also create potential corruption schemes for managing the assets of liquidated banks.

The document, among other things, effectively deprives depositors, shareholders, and creditors of property rights and makes it impossible for them to appeal FGVFL's actions in court during a bank's liquidation, which violates the Constitution of Ukraine.

The loss of trust in the deposit guarantee institution may lead to a mass withdrawal of deposits, negatively impacting the economy as a whole. Additionally, such changes in the banking sector will deter investors, significantly worsening the investment climate in the country.

Deprivation of Depositors' Protection in Case of Bank Liquidation

In addition to violating the norms of the Constitution of Ukraine, Hetmantsev's bill also contradicts the Law of Ukraine "On Consumer Rights Protection." According to this law, the state guarantees consumers protection of their rights and interests when entering into contracts, as well as during the fulfillment of obligations. Consumers also have the right to receive complete, reliable, and timely information about the service and the conditions of its execution. Furthermore, public authorities cannot make decisions that worsen the situation of consumers compared to the existing legislation.

Hetmantsev's legislative initiative proposes significant restrictions on the rights of depositors and creditors regarding effective protection of their funds in case of bank liquidation. If a bank is liquidated, depositors will not be able to challenge the FGVFL's decision and seek fair compensation payouts.

If the bill is adopted, liquidation procedures will be carried out by the Deposit Guarantee Fund for Individuals without sufficient transparency, creating conditions for abuse and opaque distribution of assets. There may be situations where the liquidated bank transfers assets to third parties without settling obligations to depositors.

The legislative changes proposed by Hetmantsev regarding the FGVFL's operations will ultimately lead to uncertainty and risks of delays in payments to depositors, shareholders, and creditors of the bank undergoing liquidation. In addition, depositors will not be able to receive clear information about the timelines, conditions, and mechanisms for the return of their funds.

There is also a possibility of diluting the timelines for guaranteed payments through bureaucratic mechanisms, which could prolong the process of returning funds for years.

If this bill is passed by parliament, thousands of depositors may face challenges in recovering their funds, while the state will gain a tool for uncontrolled redistribution of assets of liquidated banks.

Restriction of Access to Public Information

Another law that Hetmantsev proposes to violate in his initiative is the "On Access to Public Information" law. It guarantees that everyone has the right to access public information held by entities with governmental authority. State bodies are obliged to ensure openness, transparency, and accessibility of information about their activities. Limitations on access to information are allowed only on legal grounds and cannot be used to conceal information about human rights violations.

However, Hetmantsev's bill restricts access to information about the transfer of bank assets, as it allows the FGVFL and the NBU to limit access to information regarding the liquidation processes of banks.

The lack of open information regarding the management of a liquidated bank's assets complicates public oversight. This could facilitate abuses and manipulations in the distribution of assets.

The operations of the Deposit Guarantee Fund for Individuals will become opaque, and citizens will not have the opportunity to obtain information about the use of their funds and will be unable to respond in a timely manner to possible violations. Furthermore, legal proceedings regarding unlawful actions of the FGVFL will be hindered due to a lack of information.

All of this creates enormous corruption risks in the bank liquidation process. Ultimately, this will lead to a decrease in trust in the financial system and government institutions from both Ukrainians and foreign investors.

Therefore, Hetmantsev's bill contains serious violations of Ukrainian legislation, which could result in significant restrictions on the rights of depositors, an increase in corruption risks, and a decrease in transparency in the financial sector. If adopted, thousands of depositors may lose their funds without the possibility of legal protection, while authorities will gain additional levers of influence for opaque management of assets of liquidated banks. The investment climate in Ukraine will significantly deteriorate, which will have a profoundly negative impact on economic stability.